Framework, etc.

Corporate Governance Framework (Simplified Version) (as of June 21, 2017)

1Board of Directors

At KDDI, Board of Directors resolutions determine:

  • Matters prescribed by the Companies Act or other laws and regulations
  • Matters prescribed by the Articles of Incorporation
  • Matters delegated for resolution at the general shareholder meeting, and
  • Other important management-related matters.

For other important management-related matters, their importance is determined according to such factors as the scale of money, business, assets, and investment involved.
These decision standards for importance are not permanent.
Rather, they are reviewed appropriately in accordance with changes in the legal system and the environment in which the Company operates, with the aim of ensuring management speed and effectiveness.

2Advisory Committee

KDDI has formed a Nomination Advisory Committee and a Remuneration Advisory Committee to discuss with and provide advice to the Board of Directors to maintain both transparency and objectivity on the system of nomination of executive candidates and Audit & Supervisory Board member candidates and the level of remuneration for executives.
The Chairman, Vice Chairman and half or more of the members of these committees are outside directors.

3Corporate Management Committee

Comprised of internal directors, executive officers and others, the Corporate Management Committee deliberates and decides on basic management policies and other important matters concerning the Company and KDDI Group affiliates and subsidiaries.

4Audit & Supervisory Board/Audit & Supervisory Board Members

Audit & Supervisory Board members conduct their audit work based on audit policies and plans established by the Audit & Supervisory Board, and carry out their work by attending meetings of the Board of Directors, the Corporate Management Committee, and other major internal meetings. The Audit & Supervisory Board receives reports on the audit methods of Audit & Supervisory Board members and their results, discusses them, and offers its opinions, as appropriate, at meetings of the Board of Directors.

5Internal Audit

KDDI conducts internal audits targeting all the operations of the Group, and regularly reviews the appropriateness and effectiveness of internal controls. The results of these internal audits are reported to the president and the Audit & Supervisory Board members, along with recommendations for improvement and correction of any problems.

[Policy on Transactions between Related Parties]

In accordance with the Companies Act, the Company requires competitive or conflict-of-interest transactions by directors to be approved by and reported to the Board of Directors.
Individual transactions with major shareholders are conducted in accordance with "Appropriate Accounting and Adherence to Agreements," one of the basic principles of the KDDI Code of Business Conduct. In line with this principle, such transactions are decided upon in the same manner as other transactions through internal requests for decision, rather than by setting special standards. In addition, internal requests for decision are checked by Audit & Supervisory Board members.
The representative directors of Kyocera Corporation and Toyota Motor Corporation, which are major shareholders of the Company, serve as outside directors of the Company. Accordingly, we ensure governance by striking a balance between comprehensive approval by the Board of Directors and reports and internal requests for decisions on individual transactions.

6Internal Committees

We have put in place the KDDI Group Business Ethics Committee to deliberate and make decisions on compliance-related items for the Group. We have also established a Disclosure Committee to contribute to enhancing governance, as well as an Information Security Committee and a CSR Committee, set up with the goal of a strategic integration of management and CSR.

Organizational Form

Company with an Audit & Supervisory Board

Composition of Directors and Advisory Committees

Policies and Procedures Involving the Nomination of Director and Audit & Supervisory Board Member Candidates by the Board of Directors

The nomination of director and Audit & Supervisory Board member candidates involves deliberation by the Nomination Advisory Committee following a selection of candidates based on the following standard. In addition, Audit & Supervisory Board member candidates are approved by the Board of Directors following approval by the Audit & Supervisory Board.
KDDI believes that in deciding on matters, including those important to management, and in exercising supervision as required by law, it is essential that the composition of the Board of Directors as a whole ensures a high level of specialized expertise and a diversity of perspectives, and we therefore base our selections on the following types of Board members.

Director Candidates

  • Specialist knowledge or experience in various fields of business
  • Knowledge of management
  • Highly degree of independence and specialist knowledge appropriate for supervising

The Company has currently elected one female independent outside director.
KDDI believes that the size of the Board of Directors should be kept to a number appropriate to ensuring a balance between effective management and prompt decision-making, and its Articles of Incorporation has set a maximum of 20 members.

Audit & Supervisory Board Member Candidates

People who are able to supervise overall management from a perspective independent from directors and who have the extensive experience and broad-ranging insight to enhance audit appropriateness.

Decision Standards for Independence of Outside Executives

In addition to the outside director requirements in the Companies Act and the independence standards provided by financial instruments exchanges, the Company has formulated its own standards. Specifically, these standards state that people hailing from business partners making up 1% or more of the Company's consolidated net sales or orders placed are not independent.

Analysis and Evaluation of the Effectiveness of the Board of Directors

Objective of Board of Director Evaluations

To ensure a correct understanding of the current status of its Board of Directors and to work toward continuous improvement, KDDI has its Board of Directors conduct regular annual self-evaluations.

Overview of the Evaluation Process

The Company verifies the effectiveness of its Board of Directors based on an evaluation by the directors and the Audit & Supervisory Board members. The evaluation is conducted in questionnaire form, combining a four-grade rating scale with free space for comments.
This supports our efforts to validate the effectiveness of our initiatives and uncover any areas for improvement from both a quantitative and qualitative perspective.
The evaluation targets the most recent one-year period, and is conducted regularly on an annual basis. The results are reported to the Board of Directors, which then considers future countermeasures.
Key items for evaluation are as listed below.

  • Operation of the Board of Directors (including composition, documentation and explanations, provision of information, etc.)
  • Management supervision (including conflicts of interest, risk management, and management of subsidiaries, etc.)
  • Medium to long-term discussions (examination in medium-term management planning, monitoring of plan execution, etc.)

Overview of Evaluation Results

[Summary]

The Board of Directors was evaluated highly for comprising directors with multifaceted viewpoints, providing an environment in which outside directors can fully exercise their respective areas of expertise, and allowing free and open discussion. The Board was also seen as functioning effectively in terms of timely, appropriate decision-making and supervision of management.

[Improvements over the Previous Evaluation]

Improvements were verified in areas that had been pointed out as issues in the previous evaluation. These included providing opportunities for those in charge of the Company's operating divisions to explain their respective businesses and strategies to the outside directors, as well as distributing materials prior to Board of Director meetings and accepting questions in advance of deliberations so that responses can be incorporated in explanations offered at those meetings.
Discussions of medium to long-term management strategy have also taken on greater substance with the inclusion of outside directors in such discussions from the development stage of medium-term management plan formulation.

[Future Issues to be Addressed]

Feedback indicates that, going forward, it would be advisable to further enhance discussion of strategies for sustained growth, including the long-term outlook for the management environment and policies for responding to changes in that environment.
Based on these findings, we will continue to work toward ongoing improvement.

Reasons for Appointment as Outside Officers and Principal Activities (FY2017.3)

Name Reason for appointment as an outside director of the Company Principal activities
Goro Yamaguchi Mr. Yamaguchi has abundant management experience and superior knowledge gained in his role as representative director and president of one of the world's leading manufacturers of electronic components and equipment. We wish to leverage his wideranging opinions, taking a medium- to long-term perspective, to contribute to the enhancement of the Company's corporate value, primarily in the area of IoT, which the Company will be pursuing going forward. Accordingly, he has been appointed as a director. -
Nobuyori Kodaira Mr. Kodaira has abundant corporate management experience and superior knowledge gained in his role as an executive at one of the world's leading automobile manufacturers, and as its global Chief Risk Officer. In the Board of Directors meetings, he has offered many wide-ranging opinions with regard to the Company's management on strategy and risk management, taking a medium- to long-term perspective, and taking our future competitive environment into consideration. We wish to continue benefitting from his contributions to the enhancement of the Company's corporate value. Accordingly, he has been appointed a director. Attended 11 of the 12 meetings of the Board of Directors
Shinji Fukukawa Mr. Fukukawa has abundant experience and superior knowledge he has gained from many years of practical experience in the public sphere and involvement in the execution of business at various organizations. In the Board of Directors meetings, he has offered many wide-ranging opinions from an independent position from the management team with regard to the Company's management, based on changes in economic and social trends, and taking a medium- to long-term perspective. We wish to continue benefitting from his contributions to the enhancement of the Company's corporate value. Accordingly, he has again been appointed a director. Moreover, with this background, we judge there to be no risk of a conflict of interest with general shareholders and accordingly he has been appointed as an independent director. Attended 12 of the 12 meetings of the Board of Directors
Kuniko Tanabe Ms. Tanabe has abundant experience and superior expert insight, cultivated as the partner at a law office. In the Board of Directors meetings, she has offered many expert opinions from an independent position from the management team regarding legal risk management, taking a medium- to long-term perspective. We wish to continue benefitting from her contributions to the enhancement of the Company's corporate value. Accordingly, she has again been appointed a director. Moreover, with this background, we judge there to be no risk of a conflict of interest with general shareholders and accordingly she has been appointed as an independent director. Attended 12 of the 12 meetings of the Board of Directors
Yoshiaki Nemoto Mr. Nemoto has a high level of knowledge in information processing, communications and network engineering, which is directly relevant to the business of the Company, as well as a deep understanding of disaster prevention that is valuable for the operation of our business. In the Board of Directors meetings, he has offered many expert opinions from an independent position from the management team regarding operational policy as an information communications operator providing social infrastructure, taking a medium- to long-term perspective. We wish to continue benefitting from his contributions to the enhancement of the Company's corporate value. Accordingly, he has again been appointed a director. Moreover, with this background, we judge there to be no risk of a conflict of interest with general shareholders and accordingly he has been appointed as an independent director. Attended 10 of the 10 meetings of the Board of Directors
Name Reason for appointment as an outside Audit & Supervisory Board member of the Company Principal activities
Akira Yamashita Mr. Yamashita has cultivated abundant experience and knowledge gained from many years of practical experience in the public sphere and involvement in the execution of business at various organizations. From the perspective of leveraging this knowledge and experience to monitor general management and to engage in appropriate audit activities, he has been appointed as an Audit & Supervisory Board member. Furthermore, with his background, we judge there to be no risk of a conflict of interest with general shareholders and accordingly he has been appointed as an independent auditor. Attended 10 of the 10 meetings of the Board of Directors
Attended 10 of the 10 meetings of the Audit & Supervisory Board
Kakuji Takano Mr. Takano has abundant experience as a Certified Public Accountant, as the representative of an accountancy firm and as an auditor for other companies, in addition to which he has cultivated extensive experience and knowledge in the execution of business at various organizations. From the perspective of leveraging this primarily accounting-related knowledge and experience to monitor general management and to engage in appropriate audit activities, he has been appointed as an Audit & Supervisory Board member. Furthermore, with his background, we judge there to be no risk of a conflict of interest with general shareholders and accordingly he has been appointed as an independent auditor. Attended 10 of the 10 meetings of the Board of Directors
Attended 10 of the 10 meetings of the Audit & Supervisory Board
Nobuaki Katoh Mr. Katoh has abundant experience as a director of listed companies, and has extensive experience and knowledge as an auditor and through execution of business at various organizations. From the perspective of leveraging this knowledge and experience to monitor general management and to engage in appropriate audit activities, he has been appointed as an Audit & Supervisory Board member. Furthermore, with his background, we judge there to be no risk of a conflict of interest with general shareholders and accordingly he has been appointed as an independent auditor. Attended 9 of the 10 meetings of the Board of Directors
Attended 9 of the 10 meetings of the Audit & Supervisory Board

Support for Outside Directors and Audit & Supervisory Board Members

In addition to notifying outside directors and outside Audit & Supervisory Board members in advance of the schedule and agenda for meetings of the Board of Directors, proposal materials are also distributed prior to the meetings to encourage understanding of the agenda items and invigorate discussion at the meetings.
Questions are also accepted in advance, and are used to enhance explanations on the day of the meeting, in an effort to provide for deeper, more substantial deliberations.
The Company also provides opportunities for outside directors and outside Audit & Supervisory Board members to learn from executives in charge of each field, who cover industry trends, the Company's organizational structure, its businesses, a description of its technologies and its future strategy. This is intended to deepen their understanding of our business and thus invigorate discussions at the meetings of the Board of Directors.
On April 1, 2006, KDDI established the Auditing Office to support Audit & Supervisory Board members, including outside members.

Policy on Strategic Shareholdings

KDDI believes that participating in tie-ups with a variety of companies is essential to providing its customers with increasingly diverse and advanced services.

To this end, our basic policy is to engage in strategic shareholdings after comprehensively judging that such holdings will contribute to KDDI's business and support the sustainable growth and increased corporate value of the entire KDDI Group over the medium to long term.

Accordingly, if determined to be necessary given such factors as the scale and importance of these holdings, the purpose and rationality of such holdings is explained to the Board of Directors.

Standards for Ensuring Appropriate Exercise of Voting Rights on Strategic Shareholdings

Given the extensiveness and diversity of the KDDI Group's businesses, we believe that setting uniform standards throughout the Company could impair the corporate value of companies issuing shares held by the Group, as well as of the KDDI Group. For this reason, while respecting the intentions of share-issuing companies we set as our standard for exercising voting rights the sustainable growth and increased corporate value of the entire KDDI Group over the medium to long term, taking into overall consideration such factors as periodic business results and the results of dialogue with issuing companies.
To guard against decisions skewed toward short-term business interests, we have created a process for exercising voting rights that involves checks by the management team, thereby ensuring that management decisions are made from a Companywide perspective.

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